Duty-free shops fail to woo flyers

Duty-free shops fail to woo flyers: India’s duty-free shops have an abysmal record when it comes to attracting air travellers. While the average spends per passenger are around $18 worldwide and $8 even in countries like Sri Lanka where the passenger traffic is comparatively lower, at duty free shops in India this figure falls to a low of $1.5 on an average per person.
This despite the fact that passengers from the Indian sub-continent generate over 30% of the total revenues in the famous Dubai duty-free shops, according to a research by Alpha Airports which has tied up with Pantaloon Retail to set up duty-free shops at several airports.


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Retail analysts feel that duty-free shops should provide a proposition, which high streets or malls do not provide in that particular country. Trammell Crow Meghraj Retail Services president Shubhranshu Pani concurs, “A passenger generally scouts for products at the duty-free since they are available at a relatively lower price than elsewhere in the country. Also, it saves passengers from carrying more baggage.” However, the concept of duty-free has not been fully realised in India as compared to other parts of the world.

Indian airports have been generating majority of their revenues from aeronautical services like airport charges. The ratio of aeronautical and non-aeronautical revenues is 85:15 in India, while it is almost 50:50 in developed countries. Says Alpha Airports Group MD (Asia) Paul Topping “In India, duty-free shops have limited variety and the pricing is less enticing. Sales and service taxes in India undermine the concept of duty-free shopping.”

TRAVELOGUE
• In 2-3 years, airport retailing in India will generate $650 m
• Travellers spend only $1.5 per person in India, $18 worldwide, $8 in Sri Lanka
• Indian sub-continent generates 30% of total revenues in Dubai duty-free shops

Despite this, Topping expects that in the next 2-3 years with Delhi, Mumbai and a number of other airports being modernised, airport retailing in India will generate business of around $650 million.

Says Kapil Kaul of the Centre for Asia Pacific Aviation (CAPA), “Airports are gradually becoming supermarkets, where one can also take-off and land. Post-modernisation, Indian airport retailing would gain momentum since the much needed infrastructure issues are being addressed”.